U.S. energy companies cut oil and natural gas drilling this week for the first time in 31 weeks. However, the rig count increased for the record 22nd consecutive month.
As the U.S. publicly traded companies continue to pay down debt and return money to shareholders, the weekly decline in rig counts is a sign that production is not increasing as much as it has been declining.
In its closely watched report Friday, Baker Hughes Co stated that the U.S. oil-and-gas rig count, which is an indicator of future output, dropped by one to 727.
Baker Hughes stated that despite this week’s big drop, the total count was still up by 270 or 59% over last year.
The total number of oil and gas rigs increased by 29 in May, which was the largest monthly increase since Februaryraury.
U.S. oil production fell by two to 574 this week, its first drop in 10 weeks. Meanwhile, gas rigs increased by one to 151, to their highest level since September 2019.
The oil rig count increased for 21 consecutive months, while the gas count increased for the ninth consecutive month, which is the highest since May 2017.
Although the rig count has increased every month since August 2020 it has mostly been in the single digits. Oil production is still well below pre-pandemic record levels. Many companies are more concerned with returning money to investors or paying down debt than increasing output.
The U.S. government has been urging drillers to produce more oil to lower domestic prices and to help allies reduce their dependence on Russia since the invasion of Ukraine on February 24th.
According to federal energy data, U.S. crude oil production was expected to increase from 11.2 million barrels per day in 2021 to 11.9 Million bpd by 2022 and 12.9 Mio bpd by 2023. This compares to a record 12.3million bpd in 2019.
However, oil prices are up 53% this year after rising 55% in 2021. A growing number of energy companies said that they will increase spending in 2022 for the second consecutive year. This is after cutting drilling and completion costs in 2019 and 2020.
